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Hotz Accuses Sony of "False Representations" to the Court and Petitions for Protective Order - Updated
Friday, March 18 2011 @ 04:57 AM EDT

There are new filings in in SCEA v. Hotz, and the ground has shifted somewhat. Sony began the litigation portraying George Hotz as some kind of illegal hacker messing around with Sony's IP. Now Hotz accuses [PDF] Sony of making "material misrepresentations" to the court.

Specifically, Hotz says that Sony Computer Entertainment America falsely claimed at a recent hearing that the Software Developer Kit at issue in this litigation referenced SCEA being in California. The SDK, Hotz says, is owned by Sony Computer Entertainment in Japan, and the installation procedures reference Sony Japan, not SCEA. This is relevant, Sony argued, because if they found any of the SDK tools on his computer, it would "establish contacts between SCEA and Mr. Hotz" in that they claimed SCEA is the only entity distributing the SDKs. The discovery that the court ordered was based on SCEA's representations. Now what? Should the discovery even be allowed?

Hotz has filed a motion for a protective order, as the parties continue to wrangle about what should happen to Hotz's impounded hard drives. At the same time, SoftLayer Technologies has filed a motion to quash [PDF].

Here are the filings:

03/16/2011 - 98 - Letter from [Joint] Defendant George Hotz and Plaintiff SCEA re [PROPOSED] ORDER RE PROTOCOL FOR JURISDICTIONAL DISCOVERY re SDK and PSN ON IMPOUNDED DEVICES. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5-9)(Kellar, Stewart) (Filed on 3/16/2011) (Entered: 03/17/2011)

03/17/2011 - 99 - EXHIBITS re 98 Letter, Exhibit 10 Re Delayed Filing filed by George Hotz. (Related document(s) 98 ) (Kellar, Stewart) (Filed on 3/17/2011) (Entered: 03/17/2011)

03/17/2011 - 100 - MOTION for Protective Order filed by George Hotz. Motion Hearing set for 4/21/2011 09:00 AM in Courtroom A, 15th Floor, San Francisco before Magistrate Judge Joseph C. Spero. (Kellar, Stewart) (Filed on 3/17/2011) (Entered: 03/17/2011)

03/17/2011 - 101 - MOTION to Quash Subpoena filed by SoftLayer. (Wrubel, Kenney) (Filed on 3/17/2011) (Entered: 03/17/2011)

Here's part of Hotz's argument about the SDK:
SCEA made false representations to this court regarding the Software Developer's Kit ("SDK") and whether it contains information that SCEA is in California. At the March 10 hearing, counsel for SCEA represented to the Court that the SDK contains information showing that SCEA is located in California. The Court authorized a limited search of Mr. Hotz's impounded hard drives for the SDK based on SCEA's statements. Counsel for Mr. Hotz has discovered that SCEA's statements are false...Counsel for Mr. Hotz has ascertained that the SDK is owned by Sony Computer Entertainment Inc. (“Sony Japan”) and the SDK installation procedures reference Sony Japan. A cursory internet search yielded screen shots of the SDK's installation procedures, and indicates that the SDK is the property of Sony Japan and no reference is made to SCEA....

This Court astutely recognized why searching for presence of the SDK would not be relevant to jurisdictional discovery, yet SCEA represented that it was relevant and necessary because the SDK contains information that SCEA is in California. The Court permitted such inspection based on SCEA's representations. Mr. Hotz's counsel, while disagreeing, also relied on SCEA's representations. Now it appears that SCEA continues to deliberately misrepresent its position in order to gain the ability to perform a search on Mr. Hotz's drives that otherwise would not have been authorized.

The point they are making is that Hotz would have no reason to think he was having dealings with California. And if "searching for presence of the SDK would not be relevant to jurisdictional discovery," then there'd be no reason to do it.

On Sony's side, SCEA says that the installation procedure does reference SCEA, and it lists the address as California, but if you look at the exhibit [PDF] it provides, Exhibit 6, which is the Reference Tool for the SDK, an instruction manual, it merely lists SCEA as the contact in the US for "Developer Support" while the manual is property of SCE, Sony Japan. SCEA says this:

SCEA is the exclusive distributor of the PS3 System SDK in the United States. This is exactly what counsel for SCEA has represented to the Court. The SDK includes software, hardware, electronic manuals and other materials. As SCEA represented to counsel in meet and confer discussions today, the SDK does contain material that references Sony Computer Entertainment America. SCEA’s counsel even confirmed in an email to Mr. Kellar, attached hereto as Exhibit 5. Specifically, the SDK contains an electronic Reference Tool Instruction Manual that references SCEA and lists the company as Developer Support for the tool. The electronic manual is distributed as part of the SDK within the United States.
Listing it as support contact isn't really the same as demonstrating the role of licensee that SCEA claims it has, and even if it has, I'm not sure Hotz would see any tie between him and SCEA if he never had any contact with them for support, which he obviously wouldn't have initiated or desired. Nor would a contact listing tell a person that the manual was from SCEA. Even if it was, would Hotz be likely to realize it from a listing for support, something he would never in a million years be contacting?

Hotz references a Declaration by Riley Russell as Exhibit 2, but I don't see it attached as that. It was filed as docket no. 3 earlier in the litigation, so here [PDF] it is. On page 3, Russell tells the court what SCEA does:

SCEA develops and publishes its own video game software for the PS3 System and also licenses third party interactive software developers to develop interactive entertainment products for the PS3 System.
Would that license be relevant to Hotz? He wasn't looking for any such license. On page 4 Russell says:
8. SCEA is the licensee of the registered copyright for the PS3 Programmer Tools (Copyright No. TX0007208564) and is authorized to sublicense its rights to use, copy and distribute the Tools in the US. SCEI has authorized SCEA to sublicense these rights to third party developers and publishers. Attached hereto as Exhibit B is a true and correct copy of the registered copyright certificate for the PS3 Programmer Tools.
If you look at the exhibit, on the last page you'll see the copyright is registered to Sony Japan, Sony Computer Entertainment Inc. in Tokyo. So while all that SCEA says could be true, how would Hotz have known any of it?

Hotz's legal team is also asking the court to force Sony to give them a copy of the SDK. Sony offered to let them come to their offices and look at it under NDA, but with no copying allowed. That was not sufficient for Hotz's team, who argue that they can't do anything without a copy.

Also Hotz has filed a motion for a protective order [PDF] regarding the searching of his computer hard drives, arguing that "SCEA now attempts to engage in a jurisdictional fishing expedition as a means to utilize jurisdictional discovery to achieve other ends".

He'd like his encrypted hard drives copied and kept intact and otherwise untouched, so as to preserve the evidence, but without anyone pawing through it at this time:

Mr. Hotz is not seeking to withhold information from Plaintiff. Instead, Mr. Hotz seeks only to (1) protect the information he is willingly providing by directing that the copy of his hard drive be created as-is and unaltered, and (2) relieve the undue burden and expense of appearing in this forum for a deposition where Mr. Hotz will gladly offer the same information through written deposition....

Discovery in this context must be limited to the issue at hand, which is determining jurisdiction, and it should be limited accordingly. SCEA now attempts to engage in a jurisdictional fishing expedition as a means to utilize jurisdictional discovery to achieve other ends. This should not be allowed by this Court.

He says his hard drive has classified research materials on it he is required by contract to keep confidential, and some information on it has "extreme commercial value", and if it is released to the public, it would "be disastrous" for him "both financially and to his reputation".

That, of course, is a bit of a mirror of what Sony is saying to Hotz, if you think about it, but in a different context.

If you want to see lawyers who aren't liking each other much, read the Exhibits, #99, consisting of emails back and forth between the two sides. Hotz's lawyer needed to file a contemplated proposed joint order by midnight, but a few minutes before the deadline, he's still asking SCEA for their contribution:

Holly, it is now 11:51. Where is your portion of the letter (which we have had no chance to review and rebut). You have had our portion since 10:40 and we have received nothing from your portion. This is prejudicial and a violation of the Court's order (that you wrote). Please send me your portion immediately. Thank you.
At seven minutes to midnight, 11:53 PM, she emails back, "It's attached. We are sending exhibits in the next email. Please fix the signature." Please fix the signature while you wait for the attachments in the email to follow. I love that touch. Like all that can happen in 7 minutes.

And of course it didn't. He ends up filing late, and while there is a proposed order, or more exactly two competing orders asking the judge to pick one, this exhibit is to show the judge that it was not his fault he's late filing. The joint letter says that Hotz's lawyer didn't get the exhibits until 12:12 AM, and they believe Sony delayed on purpose:

As a result of SCEA’s failure to comply with their own time limitations as established in Judge Spero’s Order, Mr. Hotz was unable to address and rebut SCEA’s arguments in this joint letter. SCEA’s counsel did not provide Mr. Hotz’s counsel with their portion of the letter until 11:53pm on March 16, 2011 and did not send the included exhibits until 12:12am. SCEA’s delay was undue and was in bad faith.
In a way, it's good for Hotz that it happened, though. It should give the judge some insight into what it's like dealing with Sony. That might incline him to listen more favorably to Hotz's arguments.

It's hard to predict what might happen with the Hotz motion for a protective order. A judge might reason that Hotz asked for one thing before and got it and now he's asking for what he originally argued he didn't want, and it might annoy the judge. Hotz says the neutral third party, Michael Grennier, more or less agrees with him that it's normal to just copy an encrypted hard drive as is. And, now that the issue of whether any of this should be happening at all in jurisdictional discovery has been raised, it shifts the balance a bit, unless the argument is completely rejected.

Sony wants to figure out if Hotz has any ties to California. When the parties sent a joint letter to the judge about all this, they said that "Among the discovery sought by SCEA for jurisdictional purposes are Requests for Production, Interrogatories, an Inspection Demand to inspect Mr. Hotz's PS3 System and computers, a Notice of Deposition, as well as third party subpoenas to ascertain Mr. Hotz's forum related contacts with California." But they'd met and Sony had narrowed its requests, the letter goes on to say. In the letter, Sony argued that it should be allowed to look through the hard drives:

For example, the impounded devices may contain emails related to jurisdiction and any PS3 System materials including any PS3 instruction or warranty manuals or other materials such as software, distributed by SCEA that would show contacts with SCEA in California. SCEA should then be allowed to review any jurisdictional material therein prior to its deadline for responding to the Motion to Dismiss.
Hotz's argument was that things were getting overbroad:
SCEA's request to allow the third party neutral to inspect Mr. Hotz' impounded drives for purposes of segregating and capturing "relevant material" is unacceptable. Inspection of Mr. Hotz's drives for "relevant material" is overbroad, and SCEA has already agreed not to demand jurisdiction discovery. The third party neutral is not in a position to determine what is or is not relevant to the current jurisdictional discovery inspection of Mr. Hotz's drives for purposes of matters and inspection of Mr. Hotz's drives is not the purpose of the Impoundment Order.
The key here is what Hotz means when he says that Sony has "agreed not to demand jurisdiction discovery." If that means they agreed not to use the hard drives for that, well and good, but if they didn't, and this is a miscommunication, Sony will argue that it wants to know if there are emails tying Hotz to California. But now that Hotz has told the court about what it calls SCEA's misrepresentations about the SDK referencing SCEA, it's getting a lot more complex than when this began. It started as a simple Sony narrative, whereby their precious IP had been misused by this pirate hacker bad guy. Now it is Hotz saying it's SCEA playing games you are not supposed to play in a court of law.

Can you imagine how it feels to know someone is going to be looking through your emails in civil litigation to see if any of them are to people in California? That's what Hotz means by overbroad. But how, pray tell, would the third party know by an email address where someone is? If people use Gmail, for example, there's no identifying IP address even. Maybe he'd just search for the keywords California and CA and various cities. But I really can't see how the TIG people can possibly judge who is or isn't in California without actually reading all the emails and then researching outside the four corners of Hotz's hard drives.

SoftLayer Technologies says it got a subpoena, but it "moves the Honorable Court to quash that Subpoena and asserts objections to that subpoena for failing to allow reasonable time to comply, requiring disclosure of protected matter, and subjecting the subpoenaed party to undue burden, consistent with Fed. R. Civ. P. 45." SoftLayer is referencing the Federal Rules of Civil Procedure, Rule 45, basically just repeating the language in the Rule, but without much meat on the bones otherwise. Normally, one expects to see a bit more than this in a motion to quash. For example, here's Oracle's Motion to Quash [PDF; text] in 2006 when SCO tried unsuccessfully to drag it into its litigation against IBM. You see 16 pages, listing all the reasons why the court should grant Oracle's motion, which it did.

Here's the part of Rule 45 about quashing a subpoena:

(3) Quashing or Modifying a Subpoena.
(A) When Required. On timely motion, the issuing court must quash or modify a subpoena that:
(i) fails to allow a reasonable time to comply;

(ii) requires a person who is neither a party nor a party's officer to travel more than 100 miles from where that person resides, is employed, or regularly transacts business in person — except that, subject to Rule 45(c)(3)(B)(iii), the person may be commanded to attend a trial by traveling from any such place within the state where the trial is held;

(iii) requires disclosure of privileged or other protected matter, if no exception or waiver applies; or

(iv) subjects a person to undue burden.

(B) When Permitted. To protect a person subject to or affected by a subpoena, the issuing court may, on motion, quash or modify the subpoena if it requires:
(i) disclosing a trade secret or other confidential research, development, or commercial information;

(ii) disclosing an unretained expert's opinion or information that does not describe specific occurrences in dispute and results from the expert's study that was not requested by a party; or

(iii) a person who is neither a party nor a party's officer to incur substantial expense to travel more than 100 miles to attend trial.

(C) Specifying Conditions as an Alternative. In the circumstances described in Rule 45(c)(3)(B), the court may, instead of quashing or modifying a subpoena, order appearance or production under specified conditions if the serving party:
(i) shows a substantial need for the testimony or material that cannot be otherwise met without undue hardship; and

(ii) ensures that the subpoenaed person will be reasonably compensated.

[ Update: Note that there is an update added to the earlier article about the subpoenas issuing. The judge's order allowing the Paypal subpoena to issue is there, but also there is the transcript of the telephonic hearing held on that topic and about other discovery issues. I'll do it as text for you next. It was the judge that opens the hearing by telling SCEA that it has to add to the subpoenas information that lets the party subpoenaed know that it can file a motion to quash. And he limits the scope of the subpoena. It's fascinating, and it shows me clearly that he's fair and not just rubber-stamping SCEA's requests.]

Here is the joint letter to the court outlining the major dispute between them, including Hotz's accusation that Sony has made misrepresentations to the court, followed by Hotz's motion for a protective order, both as text:

************************

March 16, 2011

Magistrate Judge Joseph C. Spero
United States District Court
Northern District of California
Courtroom A, 15th Floor
450 Golden Gate Avenue
San Francisco, CA 94102

Re: Sony Computer Entertainment America LLC v. Hotz, et al.,
Case No. C-11-00167 (JCS) SI (N.D. Cal)

Dear Judge Spero:

Defendant George Hotz and Plaintiff Sony Computer Entertainment America LLC ("SCEA") respectfully submit this joint letter regarding their dispute relating to the jurisdictional search of Mr. Hotz's impounded hard drives as established in the March 10, 2011 Order § 5(b).

Mr. Hotz's Position

1. SCEA Made Material Misrepresentations to the Court and Refuses to Provide Mr. Hotz's Counsel with a Copy of the SDK to be Searched on Mr. Hotz 's drives.

SCEA made false representations to this court regarding the Software Developer's Kit ("SDK") and whether it contains information that SCEA is in California. At the March 10 hearing, counsel for SCEA represented to the Court that the SDK contains information showing that SCEA is located in California. The Court authorized a limited search of Mr. Hotz's impounded hard drives for the SDK based on SCEA's statements. Counsel for Mr. Hotz has discovered that SCEA's statements are false and SCEA refuses to verify their statements or provide Mr. Hotz's counsel with the SDK to verify the same. A relevant portion of the transcript is as follows:

MS. SMITH: Additionally, we're looking for information, such as any of the Sony Developer Kit tools that might be contained on that computer. That information would only be distributed by Sony Computer Entertainment America, and would establish contacts between SCEA and Mr. Hotz.

THE COURT: Or between Mr. Hotz and somebody who had them, and gave them to him?

MS. SMITH: That's correct; but at the end of the day, he would have something belonging to SCEA that he should have licensed.

THE COURT: Well, but you already say he's got something belonging to you. This is not on the merits, right? This is about general and specific jurisdiction.

MS. SMITH: Right. And one of his contentions is that he's not aware of Sony

Computer Entertainment America being in California. And we believe that the SDK the developer's kit -- would contain information showing him that SCEA is in California.

THE COURT: Okay. Mr. Kellar, both of those things seem relevant.

March 10, 2011 Hearing Transcript [Dkt No. 93] 20:20-21:14 (emphasis added).

Despite SCEA's representations, Counsel for Mr. Hotz has ascertained that the SDK is owned by Sony Computer Entertainment Inc. ("Sony Japan") and the SDK installation procedures reference Sony Japan. A cursory internet search yielded screen shots of the SDK's installation procedures, and indicates that the SDK is the property of Sony Japan and no reference is made to SCEA. A true and correct copy of such image is attached hereto as Exhibit 1. SCEA's own officer has declared that Sony Japan owns the copyright to the SDK as well. A true and correct copy of Declaration of Riley Russell [Dkt No. 3, exh. B] is attached hereto as Exhibit 2.

Moreover, pretermitting SCEA's misrepresentation, the fact that SCEA refuses to provide Mr. Hotz's counsel with a copy of the SDK is problematic in and of itself. The SDK is one of the items that the third party neutral, The Intelligence Group ("TIG"), will search for on Mr. Hotz's impounded hard drives. If counsel for Mr. Hotz is not permitted to have a copy of the SDK to determine the authenticity of the program, the appropriate search protocol, and to determine if SCEA's statements regarding the SDK are true, Mr. Hotz will be prejudiced and an unwarranted search will be performed. This is even more problematic based on SCEA's false representations regarding the SDK's pertinence to jurisdictional discovery. To date, SCEA refuses to provide the SDK to Mr. Hotz's counsel for such purposes.

SCEA cannot be permitted to make statements to the Court regarding the contents of the SDK while preventing all efforts by Mr. Hotz's counsel to confirm the truth of such statement. Indeed, SCEA has refused all efforts to identify those portions of the SDK containing information showing that SCEA is in California.

Mr. Hotz's counsel must be provided with a copy of the SDK that will be used as the source file to search Mr. Hotz' impounded drives.

2. SCEA Refuses to Demonstrate Whether the SDK contains Information Showing SCEA is in California.

This Court astutely recognized why searching for presence of the SDK would not be relevant to jurisdictional discovery, yet SCEA represented that it was relevant and necessary because the SDK contains information that SCEA is in California. The Court permitted such inspection based on SCEA's representations. Mr. Hotz's counsel, while disagreeing, also relied on SCEA's representations. Now it appears that SCEA continues to deliberately misrepresent its position in order to gain the ability to perform a search on Mr. Hotz's drives that otherwise would not have been authorized. SCEA refuses to confirm its representation to the Court regarding the SDK. If the SDK contains information that SCEA is in California, SCEA would have provided such information without hesitation. SCEA's refusal to provide such information is telling, in that it effectively shows that SCEA knows such information does not exist.

Although Mr. Hotz's counsel has attempted to work amicably with SCEA and ha s offered reasonable suggestions to reach a harmonious conclusion, SCEA is unwilling to compromise with Mr. Hotz. Mr. Hotz's counsel requested that, in addition to permitting searches for all or portions of the SDK, SCEA identify those specific portions of the SDK that show SCEA is in California. SCEA refuses to permit Mr. Hotz's counsel, or even the neutral ("TIG"), to perform a reasonable search to determine if the SDK truly does contain information showing that SCEA is in California. SCEA has refused to do so.

2

SCEA has likewise refused to provide a declaration affirming the statement made to the Court that the SDK contains information showing that SCEA is in California. Further, SCEA has not identified which portions, if any, of the SDK contain such information. SCEA's refusal to provide or confirm this clearly relevant information tends to demonstrate that the statements made by SCEA at the March 10, 2011 hearing were false and that the SDK does not contain information that SCEA is in California.

SCEA must be ordered to provide a written declaration that the SDK does, or does not, contain information showing that SCEA is in California and identifying the portions containing such information, if any.

As one final matter, contrary to the steps SCEA argues it attempted to employ to resolve this SDK matter, SCEA begrudgingly put forth artificial remedies (citing, among other concerns, inexplicable privacy considerations that could be ameliorated through simple stipulations), despite Mr. Hotz's repeated requests, only after Mr. Hotz's counsel informed them of the findings pertaining to the SDK referencing Sony Japan and informed SCEA that Mr. Hotz's counsel was going to inform the Court of these misrepresentations. SCEA's proposed order places limitations on Mr. Hotz's counsel's ability to access the SDK designed to cripple defense counsel's ability to conduct a meaningful search. The neutral has not been so required to conduct searches at SCEA's cousel's offices and to Hotz's counsel's knowledge has not been required to enter an NDA. Thus, SCEA is seeking only to prevent the Defendant from any meaningful search.

3. TIG's Protocols Discussed on March 16, 2011 Conference Call Need not be Modified

Mr. Hotz's proposed Order virtually mirrors Mr. Grennier's neutral letter, a copy of which is attached as exhibit 3. With the exception of SCEA's requirements regarding the SDK, Mr. Hotz's order proposes no substantive changes to Mr. Grennier's letter.

Conversely, in its proposed order, SCEA seeks to significantly modify Mr. Grenniers's letter regarding search protocols discussed and agreed to by all parties on March 16, 2011. TIG's protocol is agreed to by Mr. Hotz and need not be modified. The issues of SCEA's misrepresentations and refusal to provide opposing counsel with the SDK does not require modification of any searches or protocols discussed in Mr. Grennier's March 16 letter.

For the above stated reasons, Mr. Hotz respectfully requests that the Court issue the proposed order attached hereto as Exhibit 4.

4. This Joint Letter was Filed Late Because of Prejudicial, Undue Delay by SCEA Counsel

As a result of SCEA's failure to comply with their own time limitations as established in Judge Spero's Order, Mr. Hotz was unable to address and rebut SCEA's arguments in this joint letter. SCEA's counsel did not provide Mr. Hotz's counsel with their portion of the letter until 11:53pm on March 16, 2011 and did not send the included exhibits until 12:12am. SCEA's delay was undue and was in bad faith.

SCEA's Position

A. The SDK

3

Plaintiff SCEA's counsel has not made any misrepresentations to the Court regarding the SDK. This is yet another manufactured dispute by Mr. Hotz's counsel.

SCEA is the exclusive distributor of the PS3 System SDK in the United States. This is exactly what counsel for SCEA has represented to the Court.1 The SDK includes software, hardware, electronic manuals and other materials. As SCEA represented to counsel in meet and confer discussions today, the SDK does contain material that references Sony Computer Entertainment America. SCEA's counsel even confirmed in an email to Mr. Kellar, attached hereto as Exhibit 5. Specifically, the SDK contains an electronic Reference Tool Instruction Manual that references SCEA and lists the company as Developer Support for the tool. The electronic manual is distributed as part of the SDK within the United States. A tr ue and correct copy of the first and last page of the Instruction Manual is attached hereto as Exhibit 6.

Moreover, Mr. Hotz's representation that SCEA has refused allow counsel for Mr. Hotz access to the SDK is simply false. Attached as Exhibit 7 is an email from SCEA's counsel to Mr. Hotz's counsel stating that SCEA will allow Mr. Hotz's counsel to inspect an exact duplicate of the SDK materials being provided to the third party neutral, TIG. Because the SDK includes proprietary source code, SCEA required that the review be done under the usual protocols associated with the review of source code. In meet and confer, Mr. Hotz's counsel did not take issue with this process except that he wanted to ensure the ability to install the software on the stand-alone computer himself. SCEA's counsel confirmed that this would be permitted so long as he did not use his own special installation software. See Exhibit 8. SCEA's proposed order, attached hereto as Exhibit 9, even allows for such a review. See Para graph 4 (a)-(f).

B. TIG Summary

In its proposed order, SCEA simply makes a few modifications to the TIG summary of the parties' teleconference.

First, TIG proposed that Mr. Hotz make himself available next week to provide TIG access to his computer and passwords to create unencrypted images of the devices. SCEA simply proposes a hard deadline of Tuesday, March 22 in order to stay on schedule for the April 8, 2011 hearing on Mr. Hotz's motion to dismiss. Likewise, SCEA also proposes a deadline of March 22, 2011 for the parties to agree upon search terms involving the PSN and SDK.

SCEA removed TIG's reference to the "circumvention devices" since the parties have already agreed, and the Court ordered, that an impoundment protocol would be agreed upon by March 28, 2011.

After the teleconference with TIG, counsel for SCEA agreed to a few requests made by counsel for Mr. Hotz. First, SCEA agreed to allow TIG to run additional searches on any SDK material found on the impounded devices, and included that provision in its proposed order. As set forth above, SCEA also offered to allow counsel for Mr. Hotz to review the SDK at SCEA

4

counsel's office in San Francisco. Mr. Hotz, however, refused. These accommodations are not reflected in TIG's summary, but SCEA nonetheless included them in its proposed order.

Lastly, SCEA modified TIG's suggestion on how to segregate privileged and non-relevant material search results involving access to the PSN . Under TIG's suggestion, counsel for Mr. Hotz would decide what material was relevant or not after the search was performed. SCEA believes that TIG, as the third party neutral, should make such a determination. Accordingly, SCEA included language in its Proposed Order that would allow Mr. Hotz's counsel to first identify any purported non-relevant search results. If TIG disagrees with this determination, the items in dispute would be submitted, in camera, to the Court for its determination on relevance. With regard to the privilege log, SCEA's counsel simply that the log be produced to it. SCEA's counsel proposed these revision in a telephone conference with counsel for Mr. Hotz. SCEA' proposal was rejected.

Thank you very much for your time and consideration.

Respectfully submitted,

Stewart Kellar, E-ttorney At LawTM
Kilpatrick Townsend & Stockton
Jack Praetzellis, MBV Law, LLP

By: /s/ Stewart Kellar
Stewart Kellar
Counsel for Defendant George Hotz

By: /s/_Holly Gaudreau
Holly Gaudreau
Counsel for Plaintiff Sony Computer
Entertainment America LLC

Enclosures

_____

1 SCEA has never represented that SCEI has no relationship to the SDK. Moreover, the installation material that Mr. Hotz's counsel refers to herein is not actually part of the SDK itself.

6

**************************
**************************

YASHA HEIDARI (admitted Pro Hac Vice)
[email]
Heidari Power Law Group LLC
[address, phone, fax]

STEWART KELLAR (SBN 267747)
[email]
E-ttorney at Law
[address, phone]

JACK PRAETZELLIS (SBN 267765)
[email]
MBV LAW LLP
[address, phone, fax]

Attorneys for Defendant George Hotz

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION

SONY COMPUTER ENTERTAINMENT
AMERICA LLC, a Delaware limited
liability company,

Plaintiff,

v.

GEORGE HOTZ, et al.,

Defendants.

__________________

Case No. 11-CV-000167 SI (JCS)

GEORGE HOTZ'S MOTION FOR
PROTECTIVE ORDER

_______________________

Now Comes Defendant George Hotz, by and through counsel, and moves this Court for Protective Order pursuant to Federal Rules of Civil Procedure Rule 26(c) and FRCP 26(b)(2)(c), seeking to protect Defendant George Hotz from Plaintiff Sony Computer Entertainment LLC‟s (“SCEA”) overbroad jurisdictional discovery requests,

which are for the purpose of annoyance, embarrassment, oppression, and are an undue burden and undue expense on Defendant. Please note that this Motion is in addition to the Joint Protective Order, which is currently being drafted with Plaintiff's counsel.

I. PRELIMINARY STATEMENT

Mr. Hotz is a 21-year-old individual, who resides in New Jersey and who has not consented to the jurisdiction of this Court. Despite the fact that SCEA has filed this action and represented that this matter belongs in the Northern District of California, SCEA now attempts to engage in a jurisdictional fishing expedition as a means to utilize jurisdictional discovery to achieve other ends. Although the Court has limited discovery to jurisdictional issues, SCEA has demanded overly burdensome and expensive discovery from Plaintiffs that bears little, if any, relevance to the issues at hand.

The Defendant has shown good cause for the protective order sought herein, as the discovery SCEA seeks is harassing, irrelevant, burdensome, expensive, and intrusive. In addition, the confidential information sought to be protected could cause Defendant irreparable harm if mishandled or exposed.

Mr. Hotz is not seeking to withhold information from Plaintiff. Instead, Mr. Hotz seeks only to (1) protect the information he is willingly providing by directing that the copy of his hard drive be created as-is and unaltered, and (2) relieve the undue burden and expense of appearing in this forum for a deposition where Mr. Hotz will gladly offer the same information through written deposition. Mr. Hotz has been extremely accommodating to SCEA's demanding requests -- being responsive to questions and inquiries at all hours of the day and night, providing his personal hard drive with commercial, confidential, and valuable information so that SCEA can determine that nothing pertaining to jurisdiction resides on such drive, turning over his Playstation Computer, and remaining accessible despite the fact that he is not in the forum. Mr. Hotz files this Motion for a Protective Order to limit the issues at hand to the matters of jurisdiction, and to limit such discovery to less burdensome means. The

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protection Defendant seeks would prevent irreparable harm and undue burden on Defendant, while still granting SCEA the information it seeks to discover, without any burden.

II. LEGAL ARGUMENT AND AUTHORITY

FRCP 26(c) provides the court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense. Moreover, FRCP 26(b)(2)(c) provides that limitations on discovery is required and the Court must impose such limitations if "the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive" or "the burden or expense of the proposed discovery outweighs its likely benefit".

(1) Defendant Has Shown Good Cause for Entry of a Protective Order.

The U.S. Supreme Court has held that the discovery provisions, as all of the Federal Rules of Civil Procedure, are subject to the injunction of Rule 1 that they “be construed to secure the just, speedy, and inexpensive determination of every action.” Herbert v. Lando, 441 U.S. 153, 177 (1979). The Court goes on to elucidate that the material sought in discovery be "relevant" should be firmly applied, and the district courts should not neglect their power to restrict discovery where “justice requires protection for a party or person from annoyance, embarrassment, oppression, or undue burden or expense" pursuant to FRCP 26(c).Id. The federal courts have long recognized a qualified evidentiary privilege for confidential information, and such qualified protection for confidential information is also contemplated in the civil discovery context. Federal Open Market Committee of Federal Reserve System v. Merrill, 443 U.S. 340, 356 (1979); E. I. du Pont de Nemours Powder Co. v. Masland, 244 U.S. 100, 103 (1917).

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(2) Mr. Hotz's Hard Drive Should Be Copied As-Is Because it Does Not
Impact Jurisdictional Discovery, It Contains Confidential
Information, and it is Consistent with the Neutral's Certification.

Mr. Hotz moves this Court for an Order directing Michael Grennier, the neutral tasked with inspecting Mr. Hotz's devices, to copy the hard drive as-is, without first making any changes to the hard drive. Defendant has agreed and already complied with producing his hard drive and allowing a copy to be made. However, Defendant seeks to prevent an unencrypted copy of his hard drive to be created, maintained, and possibly exploited. Defendant‟s hard drive contains sensitive personal information, other individuals‟ personal information and data, clients‟ proprietary data, and confidential business information, which includes high value breakthrough innovations in the field of technology. The information on Defendant‟s hard drive is highly confidential, is not available to the public, and the emergence of any of that information would cause Defendant irreparable harm. On the other hand, copying the hard drive as-is would not cause Plaintiff any harm or burden.

This Court contemplates that only discovery pertaining to jurisdiction will be conducted, but the Order provided by Sony, which this Court adopted, states that a copy of Mr. Hotz's entire unencrypted hard drive shall be made and preserved. SCEA‟s sweeping discovery request seeks to create and maintain a copy of Defendant‟s private, personal information, confidential business information, and his clients‟ proprietary information, which is irrelevant to the jurisdictional issue and is overbroad, burdensome and harassing.

Discovery in this context must be limited to the issue at hand, which is determining jurisdiction, and it should be limited accordingly. SCEA now attempts to engage in a jurisdictional fishing expedition as a means to utilize jurisdictional discovery to achieve other ends. This should not be allowed by this Court. “District courts need not condone the use of discovery to engage in 'fishing expeditions.'” Rivera v. NIBCO, Inc., 364 F.3d 1057, 1072 (9th Cir. 2004).

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The Certification of Michael Grennier, the neutral tasked with inspecting Mr. Hotz's devices, provides and delineates certain procedures that constitute best business practices to examine Mr. Hotz's hard drive. Mr. Grennier's certification provides that a copy of the hard drive must be decrypted to perform certain searches, but nothing provides that a copy of the unencrypted drive must be or should be made. Indeed, Mr. Grennier's certification contemplates that the hard drive shall be maintained in encrypted form.

Mr. Hotz is requesting this Court ensure that the hard drives maintained remain encrypted for two primary reasons. First, the hard drive provided by Mr. Hotz contains confidential information related to a number of sensitive contracts with business entities, and such information is required to be kept classified pursuant to the agreement Mr. Hotz has with such entities. A large portion of this data relates to significant breakthroughs in technology, including the SHA-1 cryptographic hash function. Such research and breakthroughs have no relevance whatsoever to the current dispute involving SCEA.

Second, beyond information required to be kept classified, there is information on Mr. Hotz' hard drive that is of extreme commercial value. Most such information has not been released to the public and remains confidential at this time. Mr. Hotz gained initial fame as an innovative software wunderkind and Mr. Hotz has been offered significant amounts of money for the sale of his applications. Currently, Mr. Hotz has commercially valuable data and applications on his hard drive that, if released or disclosed, whether through error or intentional actions, would be disastrous for Mr. Hotz, both financially and to his reputation.

Last, it is significant to note that Mr. Hotz's request to maintain only an encrypted copy of his hard drive is consistent with the procedures proscribed by Mr. Grennier in his certification. Equally significant, Plaintiff will in no way be prejudiced by such an order, as this in no way limits the information Plaintiff may obtain pursuant to its discovery. Such Order will maintain and preserve the hard drive in its current protected

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state, allow Plaintiff to obtain the information it seeks, and ensure that an identical copy of the hard drive is maintained for redundancy and back-up purposes.

(3) An In-Person Deposition is Unduly Burdensome and Written Deposition is a less burdensome alternative. Unlike a multi-billion dollar company composed of subsidiaries and complex operations, Mr. Hotz is a 21-year-old young man that has no ties to California. His affidavits and all information provided thus far indicate this point. Despite this, SCEA is attempting to drag Mr. Hotz into this forum where jurisdiction has not yet been established for a deposition in which the number of questions that could be asked of him are, at best, severely limited, and at worst, interposed for the purpose of annoyance, harassment, prolonging litigation, and increasing costs.

Under Rule 26(b)(2), the court must consider whether the discovery sought is cumulative or duplicative, or can be obtained from some another source; whether the party seeking discovery has had ample opportunity to obtain the information pursuant to prior discovery in the action; and whether the burden or expense of the proposed discovery outweighs its likely benefit. Fed. R. Civ. P. 26(b)(2). Mr. Hotz is currently out of the country, and to hail him into California for a deposition is unduly burdensome and disruptive in the clearest sense of the phrase. This, coupled with the fact that the desired information could just as easily be obtained from some other source that is more convenient and less burdensome, requires a showing of good cause from the Plaintiff, and an order effectuating such. See In re Google Adwords Litigation (N.D. Cal., 2010). Indeed, the information sought is likely cumulative from the interrogatories already provided to Mr. Hotz, rendering such deposition of dubious value. For these reasons, Defendant seeks a protective order from this Court that limits the deposition of George Hotz to a written deposition, in order to avoid undue burden and expense where the information Plaintiff seeks could just as easily be obtained in written form.

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III. CONCLUSION

For the reasons set forth above, Defendant Hotz respectfully requests that the Court grant his motion for a protective order directing that Defendant‟s hard drive be copied as-is, in its encrypted form, and limiting the deposition to written form.

Dated: March 15, 2010

By /s/ Stewart Kellar
Stewart Kellar
Attorneys for Defendant George Hotz

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION

SONY COMPUTER ENTERTAINMENT
AMERICA LLC, a Delaware limited
liability company,

Plaintiff,

v.

GEORGE HOTZ, et al.,

Defendants.

__________________

Case No. 11-CV-000167 SI (JCS)

[PROPOSED] ORDER ON GEORGE
HOTZ'S MOTION FOR PROTECTIVE
ORDER

__________________

This Court, having read all pleadings and papers in this matter, as well as considering the entire record, hereby ORDERS:

(1) The Order of this Court, entered on March 15, 2011, pertaining to discovery, is hereby modified, such that TIG shall only make a copy of Mr. Hotz's encrypted hard drive, and any search and procedures shall move forward as consistent with the affidavit provided by Certification of Michael Grennier.

(2) A deposition of Mr. Hotz shall be conducted via a written deposition.

IT IS HEREBY ORDERED.

Dated:_______________

____________________
Honorable Joseph C. Spero
United States, Magistrate Judge

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CERTIFICATION OF CONFERENCE PURSUANT TO F.R.C.P. 26(c)

I hereby certify that I have in good faith conferred or attempted to confer with opposing counsel in an effort to resolve this dispute without Court action.

Dated: March 17, 2010

By /s/ Stewart Kellar
Stewart Kellar
Attorney for George Hotz

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